Sriram Iyer, Senior Research Analyst at Reliance Securities
International oil prices ended with small gains on Tuesday in a volatile session. Gasoline futures ended marginally in the red, while heating oil futures ended in the green on Tuesday. Domestic oil prices also ended marginally in the red on Tuesday.
The TASS news agency said Russia believes global oil demand may not recover to its 2019 peak before the pandemic and kept upside capped. However, the OPEC+ struggled to pump enough oil in August to meet current consumption as the world recovers from the coronavirus pandemic and kept downside limited.
Reuters reported that compliance with oil production cuts rose to 116 percent in August.
The figure compares with 109 percent in July. Several countries appeared to have produced less than expected as part of the OPEC+ agreement suggesting a supply gap could grow and lent support.
US oil production is still recovering from hurricanes that hit the Gulf Coast region. About 18 percent of the US Gulf’s oil and 27 percent of its natural gas production remained offline, more than three weeks after Ida.
On the inventory side, data from American Petroleum Institute (API) showed that crude stocks fell by 6.1 million barrels for the week ended Sept 17. Gasoline inventories fell by 432,000 barrels and distillate stocks fell by 2.7 million barrels.
International oil prices rose on Wednesday morning trade in Asia supported by a fall in inventories. Official US government data is due tonight.
Technically, WTI Crude Oil holds a resistance near $71.40-$72.50 levels below which could see a correction up to $70.44-$69.70 levels.
Domestic oil prices could start with small gains early Wednesday morning trade, tracking firm overseas prices.
Technically, MCX Crude Oil October holds a strong resistance near 5265 levels below which could see a Bearish momentum up to 5166-5110 levels. Resistance is at 5230-5265 levels.